By Terryn Shiells and Marney Blunt, Commodity News Service Canada
WINNIPEG – ICE Futures Canada canola contracts ended firmer on Monday, finding some spillover support from the gains seen in Chicago soybean futures, analysts said.
Ongoing concerns about dryness damaging crops in some parts of Western Canada were also supportive, as was a lack of significant farmer selling.
Some chart-based buying after prices dropped to fresh lows on Friday added to the bullish tone.
However, recent weakness in global vegetable oil markets was a bearish force on canola, as were expectations of a very large 2014/15 US soybean crop.
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Activity was choppy throughout the day as speculative and commercial traders were on both the buy and sell sides of the market ahead of StatsCan’s first production estimates of the year on Thursday.
About 13,824 contracts traded on Monday, which compares with Friday when 18,944 contracts changed hands. Spreading accounted for 9,202 of the trades.
Milling wheat, durum and barley futures were untraded, though the Exchange moved wheat prices lower following Monday’s close.
SOYBEAN futures in Chicago closed higher on Monday, as investors buy contracts for delivery before harvest while selling those for delivery after collection is complete, analysts say.
Strong demand and ongoing worries about tight old crop supplies were supportive.
The major European indices were up nearly one per cent during the early morning hours, helped by a bounce following Friday’s downdraft as well as a setback in geopolitical tensions between Russia and Ukraine.
Traders say that bearish weather conditions continue to suggest a boost in the yield ahead.
SOYOIL futures in Chicago were higher on Monday, finding direction from the gains seen in soybeans.
SOYMEAL futures closed higher on Monday, also following soybeans.
CORN futures in Chicago were down on Monday as scouts on the annual ProFarmer crop tour were greeted by cool, rainy weather in the U.S. Midwest that is likely to boost crop prospects, analysts say. The tour began on Monday.
Forecasters say that as much as four inches of rain is expected in parts of the U.S. Midwest region on Monday. There is rain in the ten day forecast for particularly dry areas including Iowa, Indiana and Ohio. There has been a bearish round of showers in North Dakota, parts of Minnesota, northern Missouri and southern/central Illinois over the last three to four days.
The market may begin to pay more attention to the expected acreage declines in South America soon and what it may mean down the road from a global supply perspective, brokers say.
WHEAT futures in Chicago fell for the first time in three sessions as geopolitical tensions between Ukraine and Russia started to ease up, traders say.
Russia reported that an agreement had been reached with Ukraine and the International Red Cross in terms of the Russian humanitarian aid to eastern Ukraine. Foreign affairs ministers from both countries met over the weekend to try and make a deal that will end the ongoing conflict between the two countries.
A convoy of approximately 300 trucks were at the border in southwest Russia, but were being held as Ukraine feared that they might contain weapons that are meant for pro-Russian rebels. The trucks are awaiting inspection before being let into the country.
Late last week, Ukraine announced that they had destroyed a Russian column of military vehicles that had crossed the border, however Russia has denied that claim.
Wheat traders are concerned that heightened escalation between Russia and Ukraine will disrupt grain trade from the region, however there has not yet been any evidence of exports slowing. In fact, some economists have reported that Russian exporters have ramped up wheat sells as they worry some countries will place sanctions on shipments of their grain.
– FC Stone underlines increased hopes for Polish and UK crops as it raised its forecast by 3.1 million tonnes for the European Union wheat harvest.
– The market is nervously watching results from the rain-soaked wheat harvest in France, the top exporter and the benchmark for prices in Western Europe. So far, reports suggest that a significant portion of the crop will fail to meet flour-making standards of its main clients outside the European Union.
– The USDA has forecast the Argentina wheat crop at 12.5 million tonnes, a 19 per cent increase from the previous cycle.
ICE Futures Canada settlement prices are in Canadian dollars per metric ton.
